"I
would appreciate information as to whether or not they have tax-exempt
status, and if contributions to them are tax-deductible to the donors.
In each case where an exemption has been granted I would like to have
indicated the facts applicable to the specific organization that brought
it under the statutory provisions for tax exemption. I would also like
to know if the facts developed during the Foreign Relations Committee
hearings with regard to each organization named are consistent with
those presented by such organization in its application for tax-exempt
status." Senate Foreign Relations
Committee Chair J.W. Fulbright

Documents

The Senate Foreign Relations Committee chartered
an investigation
in 1961 aimed primarily to unearth—and properly regulate—the
activities of Israel lobbying organizations funneling hundreds of
millions in U.S. and foreign donations into relief and political
activities. During the course of the investigation and hearings, the
committee discovered the Jewish Agency for Israel, a registered foreign
agent, was improperly funneling millions into lobbying and public
relations campaigns for Israel. Jewish Agency "conduits" included the
American Zionist Council, its unincorporated lobbying division the
American Israel Public Affairs Committee, the Jewish Telegraphic Agency
and American Israel Public Affairs Committee founder Isaiah Kenen's
Near East Report, among
others.

Getting the IRS to cooperate with the
investigation was no easy task. Committee Chair Senator J.W. Fulbright
had to obtain two separate executive orders from JFK in order to finally
obtain the cooperation of the IRS. Even this cooperation was limited,
and by order of IRS Commissioner Mortimer Caplin allowed only three
senate staff to review tax records, with the proviso that the Senate
Foreign Relations Committee not publicly disclose sensitive information
in the open hearings about Israel lobbying groups taking place in May
and August of 1963.

Commissioner Caplin admitted that Israel lobbying
organizations—as a result of facts surfaced during the Senate
hearings—had engaged in many activities they had not disclosed to the IRS
during their applications for tax-exempt status and periodic IRS
reviews.

For example in the Jewish Agency's 1952
application for tax exempt status, it failed to disclose that it was
registered under the Foreign Agents Registration Act (since 1938).
According to Caplin, none of the Jewish Agency's financial statements
disclosed "expenditures on behalf of a foreign principal." The IRS was
again bamboozled during a 1960 review ruling affirming the Jewish
Agency's exempt status when the organization again failed to disclose it
was a foreign agent.

The Jewish Agency's New York branch in 1961
received $1.4 million ($11 million in 2015 dollars) from the Jewish
Agency, in "charitable contributions from all over the world." But
among 34
Jewish Agency publications circulated in America, only one properly disclosed it was the product of a
foreign agent, according to Caplin.

Nevertheless, despite these deceptions and
cognizant of facts raised in the May 1963 Senate hearings, "the Service
held in a ruling dated July 26, 1963 that the American Section qualified
for exemption pursuant to the provisions of section 501(c)(3) of the
Code." The IRS claimed it was unware of any political activities
conducted the American Zionist Council or that it was receiving Jewish
Agency funds, some of which were transferred to Christian organizations
and a pro-Israel think tank. In fact, the IRS had no information of this
massive operation
more recent than 1952. Caplin also said the IRS granted the Jewish Telegraphic
Agency tax exempt status in 1939, but was not aware its ownership had
been transferred to a holding company of the Jewish Agency. Caplin did
not reflect on the Jewish Agency's subsidization of this key mass media outlet or
other issues raised in the Senate Foreign Relations Committee hearings.

In the end, the IRS stated that based on the
Jewish Agency's formal announcement in 1960 that it would bre reorganized and
expand its board of directors to include apportionments of U.S.
citizens, and other promised reforms, that the IRS was reaffirming the Jewish
Agency’s tax-exempt status. Mortimer Caplin left the IRS on July 10,
1964 without its "expanded exempt organizations audit program" ever
taking any apparent action on issues raised by the Senate Foreign
Relations Committee. The Jewish Telegraphic Agency, one of the targets
of the Senate investigation, breathed a sigh of relief when Sheldon
Cohen then assumed the mantle of IRS Commissioner on January 25, 1965,
reporting "Sheldon S. Cohen, 37-year-old District of Columbia native,
who was nominated this week by President Johnson to be the new
Commissioner of the U.S. Internal Revenue Service, said today his two
'pet charities' are the local Jewish Social Service agency and the
Jewish Community Center."

Archivists note: Because Congressional records are not
subject to the Freedom of Information Act, researchers must often wait
fifty years (or more) in order to obtain access such records. The Senate
Foreign Relations Committee records scanned and made available below
(and other sections of this website) were released in 2010, a few years
early. Nevertheless, some records from the investigation, including all
of the microfiche, remain unavailable or classified.

November 21, 1962 executive order on tax returns from John F.
Kennedy and accompanying White House press release. "It is
hereby ordered that any income, excess-profits, estate, or gift
tax returns for the years 1950 to 1962, inclusive, shall, during
the Eight-Seventh Congress, be open to inspection by the Senate
Committee on Foreign relations...in connection with its study of
all non-diplomatic activities of representatives of foreign
governments...attempt to influence the policies of the United
States and affect the National interest.

Confidential request signed by the Senate Foreign Relations
Committee to obtain the tax records of the American Zionist
Council, the Jewish Telegraphic Agency, and the American Section
of the Jewish Agency for Israel.

IRS Director of the Enforcement Division cautions against public
disclosure of tax return data. "Mr. McAleer stated that the
Service's position was that the Committees could not breach the
confidence under which taxpayers reported their income to the
IRS by presenting documents or returns obtained from IRS files
or by using, in any way, in a matter in which information
stemming from IRS files might come to the attention of the
public."

Senator JW Fulbright asks Secretary of Treasury Douglas Dillon
for status of the Portuguese-American Committee on Foreign
Affairs, the American Committee on Africa, The Christian
Crusade, The Jewish Agency for Israel, The Jewish
Agency-American Section, the American Zionist Council, the
Jewish Telegraphic Agency, American Christian Association for
Israel, Council for Middle East Affairs, American Israel Public
Affairs Committee, United Jewish Appeal and the Committee of One
Million.

"I would appreciate information as to whether
or not they have tax-exempt status, and if contributions to them
are tax-deductible to the donors. In each case where an
exemption has been granted I would like to have indicated the
facts applicable to the specific organization that brought it
under the statutory provisions for tax exemption. I would also
like to know if the facts developed during the Foreign Relations
Committee hearings with regard to each organization named are
consistent with those presented by such organization in its
application for tax-exempt status."

IRS Commissioner Mortimer Caplin interim response that IRS
tax-exempt status was granted to the Jewish Agency for Israel,
The Jewish Agency-American Section, the American Zionist
Council, the Jewish Telegraphic Agency and United Israel appeal,
among others, but not the American Israel Public Affairs
Committee.

IRS Commissioner Mortimer Caplin's final response to the Senate
Foreign Relations Committee. "...in certain cases information
developed at the hearings of the Foreign Relations Committee was
not contained in the material submitted to the Internal Revenue
Service in support of the claimed exemption. We have
conscientiously tried to report fully to you any such
differences, however we are not in a position at this time to
evaluate their significance in determining the right of such
organizations to enjoy exempt status. On the other hand,
we can assure you these differences are being taken into account
in connection with the expanded exempt
organizations audit program."

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